Project Risk Management
Based on PMBOK 5
thEdition
Waleed El-Naggar, MBA, PMP
The processes of conducting risk management
planning, identification, analysis, response
planning and monitoring and control on a project
Objectives are to increase the probability and
impact of positive events and decrease the
probability and impact of negative events In the
project
The process of defining how to conduct risk
management activities for a project
Important to provide sufficient resources and
time for risk management activities, and to
establish an agreed upon basis for evaluating
risk.
1.
Project Management Plan
2.
Project Charter
3.
Stakeholder Register
4.
Enterprise Environmental Factors
Plan Risk Management: Inputs (1)
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5.
Organizational Process Assets,
include but not
limited to:
Risk Categories
Common definitions of concepts and terms
Risk statement formats
Standard templates
Roles and responsibilities
Authority levels for decision making
Lessons learned
1.
Analytical Techniques
2.
Expert Judgment
3.
Meetings
Plan Risk Management: T & T
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1.
Risk Management Plan
Methodology
Roles and Responsibilities
Budgeting
Timing
Risk Categories
Definition of probability and impact
Probability and Impact Matrix
Revised stakeholders’ tolerance
Reporting format
Tracking
Risk Categories
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“ An uncommon state of nature, characterized by the
absence of any information related to a desired outcome”,
is a common definition for:
A.
An act of God
B.
An amount at stake
C.
Uncertainty
D.
Risk aversion
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Identify Risks is the process of determining
which risks may affect the project and
documenting their characteristics
1.
Risk Management Plan
2.
Cost management Plan
3.
Schedule Management Plan
4.
Quality Management Plan
5.
Human Resource Management Plan
6.
Scope Baseline
Identify Risks: Inputs (1)
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7.
Activity Cost Estimates
8.
Activity Duration Estimates
9.
Stakeholder Register
10.
Project Documents
11.
Procurement Documents
12.
Enterprise Environmental Factors
13.
Organizational Process Assets
1.
Documentation Reviews
2.
Information Gathering Techniques
Brainstorming
Delphi Technique
Interviewing
Root Cause Analysis
3.
Checklist Analysis
Identify Risks: T & T (1)
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4.
Assumptions Analysis
5.
Diagramming Techniques
Cause-and-effect diagrams
System or process flow charts
Influence diagrams
6.
SWOT Analysis (Strength, Weakness, Opportunities,
Threats)
7.
Expert Judgment
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Influence Diagram
1.
Risk Register
Risk tolerances are determined in order to help:
A.
The team rank the project risks
B.
The project manager estimate the project
C.
The team schedule the project
D.
Management know how other managers will act
to the project
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The process of prioritizing risks for further
analysis or action by assessing and combining
their probability of occurrence and impact
1.
Risk Management Plan
2.
Scope Baseline
3.
Risk Register
4.
Enterprise Environmental Factors
5.
Organizational Process Assets
Perform Qualitative Risk Analysis: Inputs
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1.
Probability and Impact Matrix
Perform Qualitative Risk Analysis:
Tools & Techniques
2.
Risk Probability and Impact Assessment
3.
Risk Data Quality Assessment
4.
Risk Categorization
5.
Risk Urgency Assessment
6.
Expert Judgment
Perform Qualitative Risk Analysis: T & T
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1.
Risk Register Updates
Relative ranking or priority list of project risks
Risks grouped by categories
Causes of risk or project areas requiring
particular attention
List of risks requiring response in the near-term
List of risks for additional analysis and response
Watch lists of low-priority risks
Trends in qualitative risk analysis results
The process of numerically analyzing the
effect of identified risks on overall project
objectives.
Quantitative analysis is performed on risks
that have been prioritized by the qualitative
risk analysis process as potentially and
substantially impacting the project's
competing demands.
11.4 Perform Quantitative Risk
Analysis
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1.
Risk Management Plan
2.
Cost Management Plan
3.
Schedule Management Plan
4.
Risk Register
5.
Enterprise Environmental Factors
6.
Organizational Process Assets
Perform Quantitative Risk
Analysis: Inputs
1.
Data Gathering and Representation
Techniques
Interviewing
Probability Distribution
Perform Quantitative Risk
Analysis: Tools & Techniques (1)
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Range of Project Cost Estimates Collected During the
Risk Interview
Probability Distribution
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2.
Quantitative Risk Analysis and Modeling
Techniques
Sensitivity analysis
Expected monetary value analysis
Modeling and Simulation
3.
Expert Judgment
Perform Quantitative Risk
Sample Sensitivity Analysis
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Modeling And Simulation
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1.
Project Document Updates
Probabilistic analysis of the project
Probability of achieving cost and time objectives
Prioritized list of quantified risks
Trends in quantitative risk analysis results
Perform Quantitative Risk
Analysis: Outputs
If a project has a 60% chance of a US $ 100,000
profit and a 40% chance of a US $ 100,000 loss, the
expected monetary value for the project is :
A.
$ 100,000 profit
B.
$ 60,000 loss
C.
$ 20,000 profit
D.
$ 40,000 loss
Quiz
https://www.facebook.com/waleed.naggar 35 PMP - Project Risk ManagementThe process of developing options and actions to
enhance opportunities and to reduce threats to
project objectives.
The key benefit is to address the risks by their
priority, have strategies to handle the risks and
assigned resources & budget to handle those risks
1.
Risk Management Plan
2.
Risk Register
Plan Risk Responses: Inputs
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1.
Strategies for negative risks or threats
Avoid
Transfer
Mitigate
Accept
Plan Risk Responses: Tools &
Techniques (1)
Response Strategies for Threats
Avoidance:
Risk prevention
Changing the plan to eliminate a risk
by avoiding the cause/source of risk
Protect project from impact of risk
Examples:
Change the implementation strategy
Do it ourselves (do not subcontract)
Reduce scope to avoid high risk deliverables
Adopt a familiar technology or product
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Response Strategies for Threats
Mitigation
Seeks to reduce the impact or probability of the risk event
to an acceptable threshold
Be proactive: Take early actions to reduce
impact/probability and don’t wait
until the risk hits your project
Examples:
Staging - More testing - Prototype
Redundancy planning
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Response Strategies for Threats
Transfer
Shift responsibility of risk consequence to another party
Does
NOT
eliminate risk
Most effective in dealing with financial exposure
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Examples:
Buy/subcontract: move
liabilities
Selecting type of
Procurement contracts:
Fixed Price
Insurance: liabilities +
bonds + Warranties
Acceptance
Used when project plan cannot be changed &
other risk response strategy cannot be used
Active Acceptance
Develop a contingency plan to execute if the risk occur
Contingency plan = be ready with Plan B
Passive Acceptance
Deal with the risks as they occur = No Plan B prepared
Contingency allowance/ reserve
Established amount of reserve (e.g.: time and/or money) to
account for the identified known risks.
Amount is decided based on probability and impact
2.
Strategies for Positive Risks or Opportunities
Exploit: Ensure opportunity is realized
Ex: Assigning organization most talented resources to the
project to reduce cost lower than originally planned.
Share: Allocating some or all of the ownership to
third part best able to capture the opportunity
Ex: Joint ventures, special-purpose companies
Enhance: Increase the probability and/or the
positive impact of the opportunity
Ex: Adding more resources to finish early
Accept: Welling to take advantage of opportunity if it
comes, but not actively pursuing it.
Plan Risk Responses: T & T (2)
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3.
Contingent Response Strategies
4.
Expert Judgment
Plan Risk Responses: Tools &
Techniques (3)
1.
Project management Plan Updates
Schedule Management Plan
Cost Management Plan
Quality Management Plan
Procurement Management Plan
Human Resource Management Plan
Scope Baseline
Schedule Baseline
Cost Baseline
Plan Risk Responses: Outputs (1)
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2.
Project Documents Updates
Assumptions log updates
Technical Documentation Updates
Change Requests
Purchasing insurance is BEST considered an
example of risk:
A.
Mitigation
B.
Transfer
C.
Acceptance
D.
Avoidance
https://www.facebook.com/waleed.naggar 47 PMP - Project Risk ManagementThe process of implementing risk response plans,
tracking identified risks, monitoring residual
risks, identifying new risks, and evaluating risk
process effectiveness throughout the project.
11.6 Control Risks
1.
Risk Register
2.
Project Management Plan
3.
Work Performance Data
4.
Work Performance Reports
Monitor and Control Risks: Inputs
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1.
Risk Reassessment
2.
Risk Audits
3.
Variance and Trend Analysis
4.
Technical Performance Measurement
5.
Reserve Analysis
6.
Meetings
Monitor and Control Risks: Tools &
Techniques
1.
Work Performance Information
2.
Change Requests
Recommended corrective actions
Recommended preventive actions
3.
Project management Plan Updates
Outcome of risk reassessment, risk audits, and
periodic risk reviews
Actual outcome of the project’s risks and the risk’s
response
4.
Project Document Updates
5.
Organizational Process Assets Updates
Monitor and Control Risks: Outputs
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What should be done with a non-critical Risk?
A.
Document them for historical use on other
projects
B.
Document them and revisit during project
execution
C.
Document them & set them aside because they
are already covered in your contingency plans
D.
Document them and give them to the customer
Thank you
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